Wednesday, January 26

FSCA Binance warning is the latest salvo against crypto traders


Earlier this month, the Financial Sector Conduct Authority (FSCA) warned The public should be cautious when dealing with Binance, the world’s largest crypto exchange.

This follows similar warnings in the United Kingdom, Japan and Canada.

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Read: UK Financial Regulator Bans Cryptocurrency Exchange Binance Markets

FSCA chief compliance officer Brandon Topham says Binance has engaged with the FSCA in order to address concerns raised by the regulator, although the warning remains.

“Our concern is that Binance is offering products to South Africans for which it needs an FSCA license, and here we are talking about financial products like derivatives rather than cryptos, which are unregulated.”

The notice says that the FSCA received information that the Seychelles-based Binance Group (which Binance disputes *) has a Telegram group that South Africans can join to gain access to the crypto exchange.

Read: FSCA suspends ZAR X exchange license

“The FSCA would like [to] cautions that in addition to this entity not being authorized to provide financial services or business, cryptocurrency-related investments are not currently regulated by the FSCA or any other body in South Africa. As a result, if something goes wrong, you are unlikely to get your money back and you will have no recourse against anyone, ”says the FSCA notice.

The regulator says that Binance is not authorized to provide financial advice or brokerage services in SA under the Financial Advisory and Brokerage Services Act (Fais).

Read:

FSCA issues and withdraws warning on Ovex crypto exchange
FSCA apologizes to Ovex, says company does not require financial services license

Binance grew from zero to the world’s largest crypto exchange in four years, generating daily volumes of around $ 2 billion. The exchange was established in 2017 by Chaopeng Zhang, a Chinese-Canadian coder also known as CZ, who previously worked at the Tokyo Stock Exchange and Bloomberg. He also spent time as a McDonald’s employee. According to Forbes, his net worth is around $ 1.9 billion, pretty much all of this in the form of cryptocurrencies.

Binance timed its entry to the market in 2017 to coincide with a large spike in crypto adoption.

While it initially limited its offering to cryptocurrencies, it later branched out into currency pair trading and a variety of derivatives, and this is what appears to have attracted unwanted attention from regulators.

It recently announced that it would suspend certain services in Singapore after coming under regulatory scrutiny there.

Binance says it is working with regulators around the world to ensure it remains compliant.

Brenton Naicker, Binance Africa business development manager, says the company has been in contact with the regulator, and the advisory issued by him was perhaps a precautionary measure and “was more of a warning that cryptocurrencies are not regulated, with specific reference to us. “The reasons for the FSCA warning were explained to customers and it has not had a negative impact on the business.

In response to the FSCA warning, Binance issued the following statement:

“We are aware of the notice published by the FSCA of South Africa September 3. At first, we would like to take this opportunity to clarify that Binance.com does not provide financial advice or provide any intermediary services. We have clearly stated this in our terms of use, which can be found here at: https://www.binance.com/en/terms.

As the FSCA stated in its notice, activities related to cryptocurrencies are currently not regulated by it or by any other body in South Africa. To bridge the gap and uphold our commitment to protecting our users, Binance.com has established strict and paramount standards in the industry. For example, Binance.com has recently implemented the Intermediate verification requirement for all users supporting Binance Know Your Customer (KYC) and Anti-Money Laundering (AML) efforts. Additionally, to ensure our users are as protected as possible, since 2018 Binance.com has implemented a Safe asset pool for users (CLEANSED) where we assign 10% of all commercial fees received to offer protection to our users and their funds in extreme cases.

Additionally, Binance.com is committed to taking a collaborative approach when working with regulators and law enforcement agencies globally and in particular, Binance.com continually collaborates with the FIC (Financial Intelligence Center), the leading crime regulator. financial institutions in South Africa. Binance.com is registered with the FIC as a voluntary self-disclosure institution. As a member of this program, Binance complies with the obligations of the FIC Law related to the establishment and verification of customer identities, record keeping and the notification of suspicious or unusual transactions in terms of section 29 of the FIC Law .

Over the course of 2021 to date, Binance.com has collaborated with the FIC in more than 462 cases, and in turn, we understand that the FIC collaborates with the FSCA to conduct further investigation when necessary. We have reached out to the FSCA for further clarification on their statement and we look forward to working with them and addressing any concerns they may have.

In terms of disclosure on social media, we have a Binance South Africa Telegram Community promoting blockchain education and community announcements.

* It does not intend or provide any financial advice. This community is moderated by Binance staff, administrators, and ‘angels’. For completeness, we also clarify that we do not have a partner entity called Binance Group in Seychelles. ”


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